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Counseling Survey Reveals Borrower Motivations


[vimeo id=”146967685″ width=”625″ height=”352″]

Pre-Assessment Survey Sheds Some Light on Borrower Perspectives

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While the survey didn’t account for recent borrowers challenged with the Financial Assessment, the research does pull back the curtain on the motivations behind older homeowners who seek out a reverse mortgage.

At the NRMLA annual meeting in San Francisco this month, Stephanie Moulton, associate professor at the John Glenn College of Public Affairs gave industry participants a sneak peek of the survey.

The project was funded in part by the MacArthur Foundation and HUD seeking to uncover the factors leading older homeowners to get a HECM, terminate their loan or ultimately decide against proceeding with the loan. Enlisting the help of ClearPoint Credit Counseling, a leading HECM counseling agency, researchers tracked the responses of over 1,700 individuals who received

HECM counseling in the years 2012-14 with an average age of 70. The sample was divided into three segments: those who got a reverse mortgage and currently hold the loan, those who got a HECM and terminated the loan and those who decided against…

Download a transcript of this episode here.

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  1. The research is biased. First the findings are being interpolated into the entire population of HECM borrowers which now stands at over 1,000,000. This bias can be seen in several ways. First, the sample was limited to borrowers who were counseled by one and only one counseling agency. Second, the average age of the sample was 70 when the average age of the youngest borrower has never dropped below 72 even on an annual fiscal year basis per HUD. Further, no prospect was included in the selection who completed an application but did not engage a counseling agency. Finally, no consumer was selected who knows (or does not know) about HECMs and has never contacted a counseling agency or a lender. So the sample is very, very skewed.

    Much of the sample could have ONLY selected either a Standard or Saver which are not available today. The only thing that has been provided in the video that can be compared to HUD information is the average age of the youngest borrower which is clearly different. Also we have no idea if the sample only included the youngest borrower and if it included all borrowers, then this indicates that the sample is even further skewed from the population of borrowers.

  2. ^^ First,whether a senior uses XYZ counseling service or ABC counseling service is irrelevant because presumably the counseling protocol at all HECM counseling servicers is the same. Second, the age of the senior is irrelevant to the CONCEPT of a HECM for creating a better life for a senior, no matter how old s/he is. The sample isn’t “skewed” because it primarily seeks to determine what seniors CURRENTLY think of present day HECMs as a retirement tool. The main goal of any HECM originator is to educate and uncover the concerns a senior may have about HECMs as they’re now structured. For this reason, the survey is valuable, albeit not perfect, for a HECM originator such as myself.

    • CC,

      What does the quality of counseling have to do with whether the sample is skewed or not? To be biased and skewed all that is required in statistical theory is that somehow there is more chance of one item being selected over another. Here it is only borrowers who took counseling from a particular counseling agency which can be selected. By definition that is skewed and a biased sample.

      The less the characteristics of the sample to the population as a whole demonstrates the biased nature of the sample. What makes this worse is if the average age of all new borrowers were averaged because that average would be greater than 72 in any fiscal year.

      If the purpose of the research is to find out what the sample thinks of reverse mortgages as retirement tools, then there would be no need to determine why the borrower obtained the reverse mortgage (the reason) but rather how they see reverse mortgages as retirement tools (perception). Where is there any findings on the perception you cite?

      The main goal of an originator is not education but rather a sale. Education is the one of the ingredients in making the sale. No one in our industry is paid for their educational skills or the number of people they educate. Reverse mortgage originators are paid for closing loans, period.

      There is no question that the research has some value but it also lacks the credibility and legitimacy it might otherwise have. It certainly does not provide relevant information about the current attitude of borrowers regarding reverse mortgages as a retirement tool; however, it does provide information about why borrowers got their reverse mortgage which is not the same as how they view it as a retirement tool.

  3. If you can prove the counseling is far different across the list of counseling providers, your criticism may have some validity, but it’s not. Whether you select ABC Agency or XYZ Agency, the counseling will be essentially the same.

    Sounds to me like your critique is skewed and biased. 😉 What have you got against reverse mortgages?

  4. CC,

    It seems if someone disagrees with you they are against reverse mortgages. How silly!

    No one cares about the quality of counseling, it is the characteristics of borrowers generally compared to those who went to this one counseling agency. How does the characteristics (financial, age, gender, location of home, value of home, value of other assets, and other factors) of counselees served by this counseling agency compare to those of borrowers as a whole? Without that comparison, the best we can say about the research is that its conclusions reasonably represent the counselees who used the HECM counseling services of this one counseling agency during the years in question.

    Now if you choose to draw different conclusions about the research you are perfectly FREE to do that.

    Would the results be different if the research were in compliance with statistical theory? Who knows but that is just the point, we cannot know because the sample was not randomly selected from the population of all HECM borrowers but just the counselees from one counseling agency. Who knows if there were further restrictions placed on researchers. All such restrictions distort to some degree research results and conclusions.

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